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BUDGET QUOTES

Eskom renewables impasse over

Eskom caused alarm in the sector in July 2016 when it said it would not sign on any more IPPs to the grid because of concerns about affordability

13 February 2017 - 06:40
Linda Ensor

The deadlock between Eskom and independent power producers (IPPs) appears to have broken, with several IPPs having received budget quotes from the power utility indicating what the cost will be of connecting them to the grid.

The quotes preceded President Jacob Zuma’s undertaking in his state of the nation address that Eskom would sign the outstanding power purchase agreements for renewable energy in line with the procured rounds. Eskom caused alarm in the sector in July 2016 when it said it would not sign on any more IPPs to the grid because of concerns about affordability.

On Friday, South African Renewable Energy Council (Sarec) chairwoman Brenda Martin said she had been informed about the budget quotes sent out.

She had also learnt that Eskom had approached the IPP office in the Department of Energy to set dates for the signing of power purchase agreements with the producers.

Martin said the budget quotes had been sent to IPPs regardless of the agreed tariff at which they would sell electricity to Eskom. This is despite Eskom’s insistence it would sign them up only to a price of 62c/kWh.

A total of 21 of the 37 IPPs with outstanding power purchase agreements received budget quotes. This included the 10 small bid winners announced two weeks ago. Martin said Sarec’s remaining concern was that all the bidders get their budget quotes confirmed.

On Friday, Eskom spokesman Khulu Phasiwe said 2,383MW of renewable power purchase agreements — about 37 — remained to be signed. To date, Eskom had signed 64 agreements for 4,000MW and two for open-cycle turbines for more than 1,000MW.

Phasiwe said the unsigned agreements had been approved by the investment and finance committee of the Eskom board and by Public Enterprises Minister Lynne Brown. The National Energy Regulator of SA had provided the necessary assurances for cost recovery of the power purchase agreements.

Mitochondria Energy chairman Sisa Njikelana was optimistic about the deadlock being broken. Hulisani executive director Marubini Raphulu said Zuma’s comments indicated the impasse had been resolved.

“Eskom’s primary objective has always been to deliver reliable energy supply at the least cost to the consumer,” Phasiwe said. “Eskom’s position is that all energy sources, be they nuclear or renewables, should be pursued at a pace and scale that the country can afford.”